Chainlink is a decentralized oracle network that provides non-blockchain data to smart contracts in a secure and trust-minimized fashion. The name also refers to an Ethereum token, which takes the ticker symbol LINK, that is used to pay for data retrieval and other Chainlink network functions.
Before viable oracle implementations like Chainlink, smart contract utility was limited. If data was not recorded to the blockchain itself, it was not available for decentralized applications, called DApps, to reference.
Chainlink seeks to expand the utility of smart contracts by delivering requested non-blockchain data to DApps. An example might be a decentralized betting application that automatically pays winning bets upon receiving the result of a sporting event.
It's important that the data transmitted is reliable and cannot be tampered with. To achieve this, the Chainlink network consists of multiple independent off-chain nodes. These Chainlink Oracle Nodes reference on-chain smart contracts known as Oracle Contracts, which receive data retrieval jobs from DApps before publishing them.
Chainlink Oracle Nodes collect and submit data to the smart contract requesting it. The data itself comes from a variety of external sources, including repositories, databases and APIs. To ensure reliability, Oracle Nodes often reference multiple data sources.
Chainlink is currently live on the Ethereum network but can provide oracle services to other networks, such as Bitcoin's Rootstock (RSK) smart contract layer. The Chainlink team plans to support additional blockchains — particularly, interoperability platforms like Polkadot and Cosmos — in the future. This may see increased Chainlink adoption as a bridge between blockchains and off-chain data sources.
Leveraging Ethereum's security, Chainlink does not need to issue new LINK tokens as part of an incentive structure. The supply is, therefore, capped at the 1 billion LINK created at launch. This scarcity, combined with an in-demand use case, may see LINK's price grow as more entities adopt the network's oracle services.
Those requiring off-chain data pay Chainlink Oracle Nodes to retrieve data using LINK. Additionally, DApp smart contracts can request that Oracle Nodes deposit Chainlink — which they forfeit, should they perform poorly. This incentivizes timely retrieval of reliable data and also drives demand for LINK tokens. Continued demand growth, set against a finite supply, may result in an increasing LINK price.
Given its ability to link blockchains with the world outside of them, demand for LINK is already high. An explosion of interest in decentralized finance, or DeFi, kicked off in 2020 and saw Chainlink forge many partnerships. With the aim of eventually supporting multiple chains and even non-blockchain entities, demand — and, by extension, the LINK price — could move higher in future.
Chainlink was founded by programmers Sergey Nazarov and Steve Ellis in 2017. The pair also founded the software firm SmartContract, which focuses on developing Chainlink.
Interestingly, the domain SmartContract.com was originally registered in October 2008, just six days before Satoshi Nakamoto published the Bitcoin white paper. In November 2014, ownership of the domain was transferred to Nazarov, perhaps creating a link between the two programmers.
Like Nakamoto, Nazarov is not one for publicity. While not anonymous, he is much less active on social media than the founders of many other major cryptocurrency projects. There is also no predefined roadmap for the Chainlink project. Rather than generating hype, the team prefers to focus on building and improving its blockchain oracle solution.
Chainlink's early development was funded by the $32 million raised by its 2017 initial coin offering, or ICO. The LINK price at the sale was just $0.11. Gradually increasing adoption since the network's May 2019 mainnet launch saw the Chainlink price balloon during 2020. Additional developer funding comes from the 30% of the LINK supply not sold during the ICO.
Starting his career at FirstMark Capital, he left to join the cryptocurrency revolution in 2011. He firmly believes blockchain technology has the ability to change the way societies distribute wealth, enforce contracts, and share critical information.
Previously a software engineer and team lead at Pivotal Labs, where he worked on securing sensitive HIPAA compliant data and building scaleable payments automation software. He's a big fan of Ethereum, Bitcoin and the decentralized future we're all building.
Mark began his career at Gunderson Dettmer, helping manage the growth of leading global hedge funds. Going on to build Valcu, a technical leader in contracts automation software, where Mark saw the large potential of externally connected smart contracts.